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  • IPPs Are Alive And Well! - Private Wealth Canada
    plan Generally past service contributions to the IPP are permitted to capture years of service as if the individual had been a member of the IPP in the past A past service contribution consists of two parts A transfer of assets from the member s registered assets RRSP RRIF LIRA and or money purchase pension plan assets into the IPP calculated in accordance with Canada Revenue Agency CRA rules and or the giving up of unused RRSP contribution room A top up contribution from the company that is deductible for corporate tax purposes Under the rules proposed earlier the cost of past service was to be first satisfied by transfers from any registered assets belonging to the IPP member and or a reduction in their unused RRSP contribution room Only then would past service contributions from the company have been permitted Following the recent changes only a portion of the member s registered assets will be considered to determine the qualifying transfer amount required to fund past service benefits This revised calculation to determine the qualifying transfer will preserve full past service benefits for the vast majority of plans thus reinstating one of the IPP s main benefits the ability

    Original URL path: http://privatewealthmagazine.ca/articles/ipps.php (2016-04-26)
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  • Private Wealth Canada - Monterey Car Week
    on the rolling hills of the Laguna Seca Golf Ranch As with so many of the other events even the spectator parking lots are crammed with desirable machines Among the 900 plus vehicles Concorso featured an F50 reunion this year in addition to a mass of Ferraris Lamborghinis Maseratis DeTomasos Iso Rivoltas Bizzarrinis Alfa Romeos and even Fiats I doubt there was a single model of any of these makes missing Bugattis at Quail Once you re Italian d out as if head over to the uber exclusive Quail Motorsports Gathering where this year tributes were held for the 50th anniversaries of the iconic E type Jaguar and for Phil Hill s F1 World Championship A word of warning do not get distracted by the cars in the visitors parking and believe me this is not easy Rather Pricey Even though admission is rather pricey it s an event not to be missed with proof lying in the fact that a lottery is held each year for the 3 000 people to be admitted A great many are turned down This affords the opportunity to really examine rare and valuable vehicles up close and to speak with their owners in a truly relaxed environment This year you might also have bumped into Sir Stirling Moss Derek Bell Jay Leno Adam Corolla or Sammy Hagar The Quail provides an unequalled lifestyle experience that combines a very broad variety of outstanding automobiles with a culinary presentation able to please the most demanding palate For appetizers you can sip on champagne and snack on caviar and freshly shucked oysters while drooling over a display of very rare Ferrari Americas and Superamericas Then head over to one of the five themed dining areas Carmel Valley Italy Spain France and the Mediterranean where truly gourmet meals are prepared and accompanied by specially selected wines beers and spirits Both classic and new cars abound and are as appetizing as the meals Pagani Zonda looks like it s doing 200MPH parked on the grass at Quail Not surprisingly the Pagani Zonda R drew constant crowds with a shape that s evocative of a LeMans prototype and powered by a Mercedes Benz AMG V12 putting out a healthy 750HP Built in Modena just a Campari and soda away from Ferrari the specification list includes everything from a carbon titanium monocoque tub to the now obligatory carbon ceramic brakes so 0 60 in 2 7 with a 217MPH top end is hardly a surprise for the rich and brave Only 15 will be produced so he who hesitates has lost The event s worldwide reputation is confirmed by its inclusion in the Louis Vuitton Classic Concours Award a competition where the luxury goods maker chooses one car each year from the Best of Show winners at The Quail the Pebble Beach Concours d Elegance the Amelia Island Concours d Elegance the Cavallino Classic and the Concorso D Eleganza Villa d Este After feasting and coveting at Quail it s time for the Friday evening auction action There was certainly no evidence of any lingering recession as multiple records fell with many drops of the gavel at pretty well all of them including the highest amount ever at auction for a car Again plan which ones you want to see Friday night or Saturday night Greatest Racing Cars Saturday is the best day to go to the Rolex Historics at Laguna Seca racetrack where this year some 550 of the world s greatest racing cars from all eras and from many countries competed against each other on a truly thrilling circuit Feel free to walk around the pits which at most other racetracks are off limits see and touch the cars and take as many photographs as you want Drivers mechanics and even owners are all very friendly and will gladly talk to you You re bound to see Jay Leno who is without a doubt the nicest most unpretentious celebrity I ve ever met Divided into 17 categories the race action is fast and furious with very short breaks between events Races and qualifying take place from Friday through Sunday A Jaguar Invitational race included some truly outstanding examples of lightweight competition E types and to actually see Ferrari 250 GTOs going wheel to wheel was a dream come true Or how about Cobras and GT350s racing each other Like Formula 1 Here you can see F1 cars from 1966 1983 which really highlights the evolution of these over the years The organ pipes on this McLaren make very beautiful music If you ve never seen or heard a real Can Am monster this is the place to be dazzled by McLarens Porsche 917s or Lolas There were precious few rules or regulations in Can Am so some very wild machines resulted the most outrageous of all being the Porsche 917 30 with an engine that could develop up to 1 500 hp Up until then the cars were primarily powered by big block V8s some over 8 liters As for specific auction highlights Bonhams on Thursday and Friday at Quail Lodge had 11 million in sales with a 50 per cent sell through rate Top sale was a 1957 BMW 507 Roadster at just over the magic 1 million mark Exceeding estimates at 852 000 was the 1979 BMW M1 painted by the famed Frank Stella and owned by the Guggenheim Museum If you were looking for a nice limo to rent for graduation parties you could have bought the Lincoln Continental Limousine customized for Pope Paul VI for 220 000 Saturday night is true auction frenzy with three auctions conducted simultaneously Gooding RM and Russo Steele so you need to examine their catalogues carefully to decide where to be and when Records fell all night and into the next day The 16 4 million world auction record setting Ferrari 250 Testa Rossa Prototype World Record Smashed Gooding Company smashed the world record for a car sold at

    Original URL path: http://privatewealthmagazine.ca/articles/MontereyCarWeek2011.php (2016-04-26)
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  • Gold's Healthy Pullbacks On Long Road To $10,000 - Private Wealth Canada
    Middle Eastern and Indian buyers gold is doing its job They are far less concerned about short term price swings Their distrust of fiat currencies has not abated just because the U S came up with yet another plan for extending the dollar s hegemony As the gold holders of the East probably realize gold is not really rising in value It is holding its purchasing power much as it has for the past 3 000 years Currencies are falling in purchasing power against gold This implies that gold can rise as far as currencies can fall and since there is no alternative but to continue printing currency to compensate for slowing growth and rising entitlement payments gold is destined to rise much higher for many years to come Gold will continue to rise until the economy is truly healthy again Talk of deflationary pressures reversing the course of gold is a short term Western assessment Of course as we ve recently seen when the stock market crashes people sell their winners to cover margin and lately the big winner has been gold The Eastern buyers as well as sophisticated Western investors are happy with pullbacks as they allow them to buy more gold at attractive prices The Chinese Central Bank has publicly stated that it plans to raise reserves from 1 100 to 6 000 tonnes of gold Unofficially they have stated 10 000 tonnes They think in terms of decades not nanoseconds like Western speculators The Chinese government encourages its citizens to put five per cent of their savings in gold They are developing infrastructure to make gold ownership as easy as possible and to make the country the most gold mining friendly country in the world Significant Development Perhaps the most significant development of the past decade

    Original URL path: http://privatewealthmagazine.ca/articles/GoldsHealthyPullbacks.html (2016-04-26)
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  • Private Wealth Canada - Investing With Whole Life Participating Insurance
    the above the risk of failure is rather minimal and should a Canadian insurance company fail there are safeguards in place to protect the public their policyholders Life Insurance Policy Dividends Another area that requires analysis is the indication that returns from the life insurer issuing the product will continue to be constant In particular dividends or returns being declared by the companies on these products are being illustrated as having superior returns to other investments based on past years performance While there is a statement that they are not guaranteed frequently the returns are being aggressively promoted as having been better than other conservative investments like bonds or GICs While this may have been true historically much has changed with regard to the elements which go into the declaration of these dividends or returns How Are Dividends Treated For Tax Purposes First there should be an understanding that dividends declared on certain types of life insurance products are quite different from those provided by companies we traditionally invest in They are not treated the same way for tax purposes for instance they are treated as interest earnings would be should you withdraw the funds from the plan prior to death What Are Insurance Policy Dividends Further dividends as declared by the boards of life insurers are calculated differently in that the elements that go into arriving at the profits of this class of insurance product are somewhat unique While top line revenues less expenses are what drive traditional profits this does not directly apply to dividends on life insurance products Dividends as they apply to these life products are actually a return of an overcharge of the premiums This overcharge is what is not needed to fund the product and so by law 98 per cent must be returned to the client in the form of this dividend It should be noted that the type of product we are referring to here is what is called a traditional whole life participating product not what is referred to as a Universal life product which is different in structure What Factors Drive Insurance Policy Dividends There are four elements that specifically apply to these life products that enable profit to be made They are mortality interest earned expenses and an element called lapse that is how long a product remains in place Actuaries those charged with determining pricing of these products attempt to predict how each of these elements will perform in future the future being as much as 20 to 30 years in advance The actual result of each of the four elements is compared to the assumption for each in the price and a positive result is what determines whether profits and eventually dividends will be declared on these life insurance products How Have Insurance Policy Dividends Performed As with any prediction it is impossible to know what will happen so in the past actuaries have been very conservative and this has resulted in very good performance of the

    Original URL path: http://privatewealthmagazine.ca/articles/investing_with_insurance.php (2016-04-26)
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  • Housing Bubble  – When Will It Burst ?
    Canada housing prices are predominantly being supported by homeowners But there s another side to the debate I believe that Canada s high house prices in relation to incomes combined with record household debt levels and overinvestment in residential construction will cause a severe correction in the real estate market Signs of stress are becoming evident The increase in housing prices is being funded through increased household debt In 2010 the average Canadian family s debt level stood at 100 000 Perfect Storm All signs point that we are We have the perfect storm brewing consistent rising housing prices for over a decade historically low interest rates and people borrowing money than ever before Not to mention that bidding wars are commonplace these days with many homeowners accepting 10 or more offers on their property The margin for error is becoming increasingly small It s a story I see and hear often People look to determine how much they can borrow base it on prevailing interest rates today and focusing on variable rates which today stand at well under three per cent Is this rate not going to go rise someday As well I find most people don t consider what their expenses might look like five years from now If we presume many of these people have young children now the cost to provide for them later for private schools and university will drive their expenses that much higher and put increasing pressure on their cash flow If you re carrying a 700 000 mortgage and rates increase by two per cent which would still make interest rates very low all of a sudden carrying costs have increased to the tune of 14 000 per year after tax dollars Canada has so far escaped any semblance of a housing

    Original URL path: http://privatewealthmagazine.ca/housing_bubble.html (2016-04-26)
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  • SERPs In Public Corporations ‒ Problems & Solutions
    continue not to pre fund RCAs The concern is the loss of Internal Rate of Return on excess contributions to the RTA Managed SERPs The solution to these concerns is the establishment of a Managed SERP Program Such a plan offers Full security of SERP benefits Fairness to shareholders Protection against deemed SDA RTA mitigation Step one in a Managed SERP is the actual establishment of an RCA No pre retirement security of SERP benefits is possible otherwise Once established Letters of Credit LC secure the RCA liabilities This largely negates the RTA impediment Cash contributions to the RCA are only the cost of buying the LC plus the matching amount to the RTA If a company is unable to secure the required LC from their bank this should be of great concern to the employees executives covered by the SERP along with the company directors It is a strong indication that the RCA should be pre funded annually notwithstanding the inequities of RTA transfers The LC offers pre retirement protection This is most important for those near retirement In the unfortunate event that the company ends up in the CCAA process the LCs secure benefits In pay benefits receive protection by Terminal Funding contributions to the RCA at retirement as determined by the company actuary and the RCA third party provider If this is not done a portion of the LC is called Fairness to Shareholders The advantage of using LCs to secure SERP benefits to retirement is that the cost is marginal relative to the IRR on funds otherwise required to secure benefits The actual cash cost of funding benefits is deferred to retirement Even though the liability for SERPs are accounted for on an accrual basis actual tax credits only materialize with contributions to the RCA or as benefits are paid The actual cash flow cost to shareholders is the net lump sum contribution required to secure benefits for the retiring plan member Although SERP benefits are now expected to retain key employees executives over the long term and address RPP inequities media reports of what some see as overly rich SERP packages are now attracting attention and comment such as why should shareholders pay when their own pensions are inadequate and should they be paid for as the liability is incurred One solution to these concerns is to establish the Managed SERP in conjunction with a SERP Cost Recovery Plan using Corporate Owned Life Insurance COLI in a Special Purpose Subsidiary SPS COLI is used extensively in the U S for SERP funding SERP Cost Recovery Plan Step two is a SERP Cost Recovery Plan established in tandem with a Managed SERP Employees executives receive security of the pension promise and in return help mitigate the cost of funding by allowing the Special Purpose Subsidiary SPS to purchase COLI products on each plan member or groups of plan members for uninsurables relative to the net cost of providing SERP benefits itigation results in two ways As

    Original URL path: http://privatewealthmagazine.ca/serps_public_corporations_problems_solutions.html (2016-04-26)
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  • Retirement Income Inadequacy Increases Significantly $150,000
    complete set of overlapping birth cohorts from 1971 onwards which are also used to analyze government policies The study distinguished between income replacement rates based on the total or gross income before or after retirement where the normal standard is an equivalent income replacement rate of 70 per cent of gross income and the study s preferred focus on consumption possibilities of net income where the income equivalency replacement rate is 100 per cent Poor Proxies The study found that gross income replacement rates are poor proxies for the replacement adequacy of actual retirement income A study of the connection between gross and net replacement rates of income at age 70 for the 1960 65 birth cohorts found that gross replacement rates in the presumed target of 65 to 70 per cent range in reality can be expected to correspond to net replacement rates in the 55 per cent to 100 per cent range The study also noted that there was no public policy concern for supplementing retirement incomes for persons earning above 80 000 per year The inadequacy of retirement income increased as income increased The study found that for the 1960 65 birth cohort currently age 46 51 average declines in net income at age 70 2030 35 would be 60 per cent or a retirement income replacement rate of net income of only 40 per cent at an average level of 150 000 Clawed Back Our examination of the income replacement rates of gross income also shows the inadequacy of retirement income replacement rates at annual incomes of 150 000 and above The inadequacy of retirement income replacement rates for individuals earning 150 000 and above where the OAS is clawed back is established by the caps on Defined Benefit pension payments at retirement of approximately 89

    Original URL path: http://privatewealthmagazine.ca/retirement_income_inadequacy_increases.html (2016-04-26)
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  • Welcome To The Family Wealth Management Business
    be considered are What is the purpose mission of the business For the family wealth business the purposes can vary but often are identified around themes such as financial independence and philanthropy Who are the clients of the business For the family wealth business what members of the family will benefit from the wealth and what individuals organizations outside of the family will also be beneficiaries charities etc What are the philosophical beliefs and values to which the business and its people will adhere For the family wealth business the philosophies and values can vary as they are a unique expression of each family However it can often include philosophical statements that address beliefs that wealth must be earned and respected as well as values such as honesty integrity hard work and respect for community What are the goals of the business For the family wealth business the goals can vary but often have both qualitative and quantitative measurements that align against typically three broad groups of goals lifestyle family and philanthropic social The preparation of family wealth financial statements is also very common place for affluent families who view their wealth as a business What are the key roles and responsibilities required within the management team and who will fulfill these roles For the family wealth business the management team which typically includes their key professional advisors such as accountant lawyer investment advisor and insurance advisor needs to address key functional advice areas such as financial structures holding companies trusts etc taxation risk management estate management and investment management When operating businesses are being sold other professionals such as business valuators and corporate finance professionals can also become involved with a family typically on a temporary basis Finally we are increasingly witnessing many affluent families who also engage other

    Original URL path: http://privatewealthmagazine.ca/welcome_family_wealth_management_business.html (2016-04-26)
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